The latest World Bank economic report released today says the war against Ukraine and sanctions against Russia are hurting the world economy and are expected to weigh on emerging markets and developing countries in Europe and Central Asia. will be expensive.
The region’s economy is now expected to shrink 4.1 percent this year, up 3 percent from the pre-war forecast, as economic shocks from the war exacerbate the effects of the ongoing COVID-19 pandemic. This will be the second decline in a few years and will be twice the size of the decline caused by the pandemic in 2020.
Ukraine’s economy is expected to shrink by about 45.1 percent, although the magnitude of the decline will depend on the duration and intensity of the war. Russia’s economy is already in deep recession due to unprecedented sanctions, and output is expected to fall by 11.2 percent in 2022.
“The scale of the humanitarian crisis caused by the war is astonishing. Russia’s attack has taken a heavy toll on Ukraine’s economy and caused extensive damage to infrastructure,” he said. Anna Bjerde, World Bank Vice President for Europe and Central Asia province. “Ukraine needs immediate financial assistance as it struggles to maintain its economy and the government to support Ukrainian citizens who are suffering and struggling with a difficult situation.”
The war in Ukraine is likely to hurt Georgia’s economy through declining trade, tourism and remittances, as well as rising commodity prices. Oil and food prices have risen sharply since the start of the war due to uncertainty and cuts in supplies from Russia and Ukraine. These impacts will lead to a slowdown in growth, initially projected at 5.5 per cent for 2022 and a decline to 2.5 per cent. The initial outlook for recovery is projected to increase from 2023, as easing monetary policy, reviving tourism and restoring economic ties will be partially offset by the gradual abolition of financial incentives.
“While we anticipate a slowdown in growth by 2022, Georgia is well positioned due to reasonable foreign and financial buffers and a reliable macro-financial framework to manage the economic consequences of the war. There are many and the debt remains stable, ”he said Sebastian Molayneus, World Bank Regional Director for the South Caucasus. “All that is needed now is to continue to manage the economy wisely, to provide support to affected businesses and households while strengthening structural reforms to increase productivity, improve human capital and mitigate the effects of climate change.”
The war added to the growing concerns of a sharp global decline, rising inflation and debt, and rising poverty. The economic impact was felt through various channels, including commodity and financial markets, trade relations and migration, and the negative impact on confidence.
The deep humanitarian crisis that ensued as a result of the war was one of the most obvious waves of global turmoil and will probably be one of the most enduring legacies of the conflict. The influx of refugees from Ukraine to neighboring countries is expected to ease previous crises. As a result, support for host countries and refugee communities will be important, and the World Bank is developing operational support programs for neighboring countries to meet the growing need for refugee funding.
The escalation of war in world oil prices also serves to emphasize the need for energy security by increasing the supply of energy from renewable sources and strengthening the design and implementation of comprehensive energy efficiency measures.